I checked and my dividends are being paid in full. Also, the prices of the VOO and VUSA seem to stay in sync. Are you saying that the withholding tax is hidden in operating costs of Vanguard Ireland? If so, then why don’t the prices diverge? I haven’t properly calculated the thing, with all dividends, and I cannot seem to find the website that would compare the total return of european and american ETFs.
Compare their prices and dividend yields intraday when both markets open. There should be 15% difference.
There’s little reason for prices to diverge, it’s same basket of stocks. And taxation rules vary by country, in Switzerland VOO is tax optimal - you’d pay max(15%, your swiss tax rate) with it. In some other country it could be VUSA, especially if country doesn’t tax worldwide income and US withholding rate is 30% - then you piggyback on the Irish tax treaty with VUSA
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I also read the “The $60’000 cap for US investments” thread, quite interesting. I checked the Bloomberg sites that you provided and they state the annual return from the last 5 years:
- VOO
14.10% - VUSD
13.62% - VT 10.62%
- VWRD 10.16%
These are pretty dramatic differences.How could this be? It cannot be explained by just the TER and WTAX. Could this data be wrong?
They have different portfolios. VOO, VUSA, VUSD are US-only, VT, VWRD are world
Of course I meant VOO vs VUSD and VT vs VWRD. Btw, I checked on JustETF and they say
- VUSD had a 5Y total return of 90.83%, which gives a CAGR of 13.80%
- VUSD had a 5Y total return of 63.16%, which gives a CAGR of 10.29%
That’s still 0.3% worse than their US equivalents. 15% tax * 2% dividend gives 0.3%, so I guess it makes sense.
Question: My european ETFs don’t levy any explicit WTAX on the Swiss side (only hidden on the ETF side). How is it with the american ETFs? After USA takes 15%, does Switzerland also levy a WTAX? Or is it just 15% US side, and then you do this DA-1 form and you pay less income taxes for that year?
If you bank with a swiss broker, they’ll take another 15% cut locally (zusätzlicher Steuerrückbehalt USA) for a total of 30%. Reclaimable with DA-1 too. Or just avoid swiss. With IB you should only see the american withholding, 15%. It’s direct tax to you so thanks to double taxation treaty you should only have to pay eventually only the maximum of US (15%) and Swiss taxes on it. Technically as it’s implemented is that you get reimbursed for the US withholding taxes by the Swiss after filing DA-1
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@chestwood96 there is no catch: if we want to reduce our trading costs with Interactive Brokers at Simplewealth, we need to have more volume.
As we automated the rebalancing with IB API, taking care of one additional ETF portfolio has very little / no impact on our operating costs.
But taking in more assets reduces our trading costs with Interactive Brokers… and hence everyone benefits. We can offer to our delegator clients lower fees per year (yes, 1% is too much) and Mustachians get automated rebalancing for cheaper (vs. alone with IB).
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